Ex-Maryland Legal Aid Group CFO, Businessman Sentenced for $1 Million-Plus Fraud

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LSC logoOne way to view Benjamin Louis King's situation is that it could be worse. That's because his total theft may have been good deal higher than the amount for which he was prosecuted. King, for three decades the chief of finance for the Maryland Legal Aid Bureau, along with an accomplice, Wendell Jackson, was sentenced in Baltimore federal court on December 14 for embezzling over $1 million from the bureau. U.S. District Judge Catherine Blake gave King 30 months in prison, to be followed by three years of supervised release; she gave Jackson 15 months in prison. Each also must make restitution. "Bennie King abused his position of trust for over a decade and stole more than $1 million through a longstanding fraud scheme," said U.S. Attorney Rod Rosenstein. "What makes the case even more offensive is that the $1 million would have paid for legal services for the poor. 

National Legal and Policy Center in July reported on the case in the context of a pair of recent reports, one issued by the Government Accountability Office (GAO) and the other by the Legal Services Corporation (LSC) Office of Inspector General. Each audit concluded that various LSC grantees exhibited a disturbing lack of internal financial controls. Substantial amounts of money were going for expenses that either were ineligible or undocumented. This pattern certainly was in abundance at the Baltimore-based Maryland Legal Aid Bureau, a nonprofit group with offices throughout the state. During the four-year period 2004-07, noted King's plea agreement, he and Jackson had diverted agency funds to their own use through a scheme to inflate office supply invoices and pocket the difference.

For 30 years - from 1978 until January 2008 - Benjamin King, now 58, a resident of Gwynn Oak, Md., served as chief financial officer of the Maryland Legal Aid Bureau. About 25 percent of the nonprofit group's funding over the years has come from the federally-chartered and subsidized Legal Services Corporation. The bureau had a "blanket" requisition system in place by which it would purchase prepaid office supplies in bulk, but without warehousing them. As CFO, King ordered supplies on an as-needed basis and draw against the prepaid sum upon delivery. But during the last several years of his tenure, underneath the supposedly watchful eyes of the organization's management and board of directors, he used the system to generate illegal kickbacks for himself and a conduit for the funds.

That conduit was one Wendell "Sonny" Jackson, now 59, a resident of Westminster, Md. and owner of a check-cashing business near Maryland Legal Aid headquarters in downtown Baltimore. Sometime in 1997 or 1998, noted prosecutors, King approached Jackson with the intent of starting a "business" to sell office supplies to his agency. The company, Baltimore Office Supply, in fact was a sham. It had no warehouse and no customers. Jackson did not even know how to create invoices until King showed him. Here is how the Justice Department summarized the operation:

The first time Jackson purchased supplies for Legal Aid, he cashed the check King had given him, bought the supplies at retail prices and returned the amount of money above the cost of the supplies to King. King told Jackson to keep the money and that the two of them could keep any money above the cost of supplies. King showed Jackson where to purchase supplies and how to create invoices to Legal Aid. King himself even created invoices for Jackson from Baltimore Office Supply to Legal Aid. These invoices were used by King's finance department to process payments to Baltimore Office Supply.

The good times would roll until January 2008, when Benjamin King, by mutual consent, left Maryland Legal Aid. Even then, things seemed normal. The executive director of Maryland Legal Aid, Wilhelm Joseph Jr., later admitted to having no idea at the time that thefts had been happening. In October of that year, however, several employees discovered discrepancies between the prices paid for supplies and the prices that should have been paid. On the advice of counsel, Joseph reported the problem to the U.S. Attorney's Office and Legal Services Corp.'s Office of Inspector General.

The house of cards eventually would collapse. LSC and the FBI launched a joint probe, concluding that King and Jackson embezzled $1,145,940.25 during January 2004-December 2007. In a given transaction, King typically kept 85 percent and Jackson kept the other 15 percent. On May 26, 2010, the Justice Department filed a criminal information count against the pair. Jackson was the first to admit his part. On September 2, King copped his own guilty plea. The U.S. Attorney's Office asserted that the actual take was close to $2.5 million, and over a full decade, but that expiration of the statute of limitations prevented further action.

Whatever the true losses, King and/or Jackson aren't likely to reimburse the Maryland Legal Aid Bureau. They already spent most, if not all, of the money at various strip clubs and Atlantic City casinos, and on hookers of varying quality. King facilitated the spending with an American Express card whose bills he paid for entirely in cash via Baltimore Office Supply invoices. No doubt the pair had a sweet ride. It's too bad that taxpayers were not consulted in advance.

Related:

New Evidence Shows Fraud, Inefficiency among Legal Services Grantees.